The EU is intensifying its sanctions pressure against Russia. On July 6, 2023, the European Parliament's Committee on Civil Liberties approved the draft law No. 2022/0398(COD), which provides for criminal liability for circumventing sanctions within the EU.
Previously, EU member states were not obliged to criminalize the circumvention of sanctions. They could limit themselves to imposing administrative penalties for their violation. However, the draft law No. 2022/0398(COD) requires all EU member states to establish criminal liability for the violation of EU sanctions.Furthermore, to harmonize the enforcement of responsibility for circumventing sanctions across the EU, the draft law includes a common definition of violations and establishes minimum penalties for them.
According to the draft law, circumvention of sanctions is understood to include:
- Concealing funds and other economic resources of a sanctioned person that should be frozen under EU sanctions.
- Concealing information that the ultimate beneficiary of funds and other economic resources is a sanctioned person.
- Failure to report to a sanctioned person information about their funds and other economic resources located within the EU.
- Failure to report to competent authorities that funds and other economic resources of a sanctioned person located within the EU, in violation of EU sanctions, are not frozen.
- Refusal to cooperate with competent authorities regarding funds and other economic assets of a sanctioned person located within the EU.
According to the draft law, if an individual violates sanctions, they may be subject to criminal liability, including imprisonment for up to 5 years and a fine of up to 10,000,000 euros.
On the other hand, a legal entity may be excluded from public trading and fined 15% of its total annual turnover. Previously, a 6% penalty was discussed. For comparison, the fine for violating GDPR is only 4%.
Currently, more than 40 different sanction regimes have been imposed on individuals who assist Russia in circumventing sanctions. However, representatives of the European Parliament believe that the inconsistent application of penalties for sanctions evasion has undermined their overall effectiveness. The new draft law aims to address this issue and strengthen the sanction pressure on Russia.
You can find more information about the EU draft law No. 2022/0398(COD) through the following link: [EU Draft Law 2022/0398(COD)]: https://www.europarl.europa.eu/RegData/docs_autres_institutions/commission_europeenne/com/2022/0684/COM_COM(2022)0684_EN.pdf
Nadmitov, Ivanov & Partners Law Firm advises on sanctions, countersanctions and corporate law matters.
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